Mainvest Review 2023
|By: Jeremy Biberdorf||Nov 25, 2022|
In a nutshell: Mainvest allows ordinary people to invest in local, brick-and-mortar businesses for as little as $100. This platform offers a new way to invest and an opportunity to diversify.
Our Mainvest review shows why this option is an intriguing way to make money and comes with the potential to be a huge gamechanger.
- Invest for as little as $100
- Open to non-accredited investors
- No investor fees
- Short track record
- Little investment activity
Compare to Other Investment Platforms
Fees0-2% annual management fee
Fees0.50% to 2.5% CrowdStreet funds annually
Mainvest Review Introduction
Previously, investing in local businesses before they appear on the stock market was something open only to private and accredited investors. The increasing democratization of the markets means that ventures like Mainvest are opening up this investment avenue for the first time.
There are no investment fees, and you can put your money into a huge range of businesses with a minimum of just $100. Advertised returns range from 8% to 10% and you get the chance to invest in local communities across the U.S.
Keep reading our Mainvest review to get the details on how this platform is supporting local communities and providing new investment opportunities for non-accredited investors to make money.
What is Mainvest?
|Customer Support||Live web chat, email, phone support|
Mainvest’s philosophy is about allowing ordinary Americans to invest in Main Street rather than Wall Street. This business investment platform was founded in Salem, Massachusetts, in 2018 by current CEO Nick Mathews. Thus far, the platform has raised $3 million in seed funding.
Since its formal launch in 2019, there’s only a limited track record. However, the platform vets all businesses before opening them up to investors. Not all businesses pass the vetting process, so there’s only a limited number of investments available at any one time.
How Does Mainvest Work?
Our review on Mainvest cannot be more excited at being able to invest in ordinary businesses. While not as stable as a stock market investment, this is one way to use your money where you can see the true value in your capital.
So how does Mainvest make its money when it charges $0 in investment fees?
Its business model is based on charging the businesses themselves a portion of the investment raised. As of this writing, businesses that successfully receive investment funds from Mainvest must pay 6% of whatever they raise. This allows the service to remain completely free for investors.
You can invest in both debt and equity opportunities for a minimum investment of $100. All you need is a local U.S. bank account and proof of citizenship or residency.
Equity investments are by far the most popular option. With an equity investment, you get paid a percentage of the business’s revenue per financial quarter until you receive your specified investment multiple.
Mainvest provides a huge amount of data to help you analyze businesses. They include documents like:
- SEC filings
- Income statements
- Balance sheets
- Financial projections
This wealth of content, alongside their general investment education content, empowers less experienced investors to make informed choices with their money.
There are no fees charged to investors when they create an account with Mainvest. Other fees that are absent from this platform include administration fees and management fees. The only rule is you need to have at least $100 to invest.
Instead, 6% of the money raised by businesses must be paid to Mainvest by the business itself.
How to Start Investing with Mainvest
Individual investors interested in using Mainvest to achieve their investment goals won’t have to jump through any hoops. In fact, the entire process is fairly streamlined! Signing up and making an account is a simple process that anyone can complete in a matter of minutes by following the steps listed below.
- First, you’ll need to head over to Mainvest.com. Click the “Get Started” or “Sign Up” button. From here, you’ll be asked to provide your email address and select a password. Next, you’ll need to submit your first and last name. You can also sign up using a valid Google account.
- The next page will ask you, “What industries do you want to include in your portfolio?” Select any and all that are applicable. Your investing opportunities won’t be limited to your selections, but these selections will give Mainvest an idea of what companies to present to you. Here are a few of the current categories:
- Food truck
- Gaming, and
- After that, you’ll need to provide Mainvest with an estimate of your entire investment plans for the year. You may be required to verify your identity, depending on your investment goals. Investing more than $5,000 will require you to provide your Social Security Number. If you plan to invest more than $15,000, Mainvest will require you to upload a copy of your government-issued identification card.
- Once the signup process is complete, you can view current investment opportunities, make a selection, and fund your initial investment. Mainvest doesn’t charge any fees for investors, so the price you see is the price you pay.
Selecting an Investment
Once you’ve joined Mainvest, you’ll have plenty of businesses to choose from. While the platform has attempted to limit the most concerning high-risk investments via its extensive background checking process, it’s nonetheless a good idea to do some research on your own. Fortunately, Mainvest has all of the information you’d want to know about a company conveniently listed for each company.
Business information is broken up into four separate sections: “Investment Opportunity,” “Data Room,” “Updates,” and “Discussion.” The information covers all of the important details, such as applicable risk factors, the projected rate of return, and documentation
As the name implies, “Investment Opportunity” gives you the general outline of the investment. You’ll be able to find out whether the specific business is SEC-regulated (although—due to the generally smaller size of businesses listed on Mainvest—this isn’t a guarantee).
“Data Room” goes into greater detail, offering important specifics such as any business plans, projected expenses, annual income, and maximum funding limits. “Updates” will let you know how the business is progressing, both in terms of funding and real-world achievements.
“Discussion” allows you to send any questions you might have directly to the owners. However, it’s important to note that anything you post will be publicly viewable.
The type of funding private businesses require will affect the type of investment that individual investors will have in the company. Currently, Mainvest offers two distinct investment opportunities. It’s important to note that the platform doesn’t currently offer or support a secondary market, which could make it impossible to transfer your debt investments to a third-party.
We recommend discussing any potential investments with a dedicated investment advisor before moving forward, as your earnings potential is based entirely on the type of investment you choose to make. A financial advisor will be able to help you choose the best option that aligns to your financial needs and goals.
Equity Investment Security
This type of investment is tied directly to the performance of the business. If the business does well, your original investment will grow. However, if a business performs poorly, so will any potential returns.
This type of investment doesn’t base returns on a business’s performance. Revenue-sharing notes are essentially a normal loan, where the business will pay you back the original capital loans (plus interest). The amount(s) you’ll earn by the investment maturity dates will be shown on your notes. The upside of this approach is limited risk (when compared to an equity investment security. The downside is that using revenue-sharing notes puts a limit on your earning potential.
Is Mainvest Right for You?
Our review on Mainvest concludes that while this is a legitimate company, it comes with far greater risk to investors than ordinary publicly traded stocks and exchange-traded funds (ETFs). Beginners who aren’t used to doing due diligence may want to stick to more conservative investments.
The lack of a long-term track record is worrisome, but of the few successful investments thus far there have been returns of up to 10%.
Its support materials for investor education and responsive customer service are ideal for getting started. With a low minimum investment, there’s no reason not to invest a small amount of money on Main Street.
Create an account with Mainvest and diversify your portfolio now.
Frequently Asked Questions
As a new and relatively untested platform, you likely have a lot of questions. Here are some of the most common queries had by investors.
All of Mainvest’s investments are in local businesses. You’ll find companies run by ordinary Americans, such as bakeries, restaurants, breweries, and beauty salons.
Under the terms of investment, businesses are required to repay your investment multiplier regardless of their actual revenue. The only way you don’t get your money back is if the business is physically unable to. In other words, there’s always a risk that the business goes bankrupt.
Yes, Mainvest is a Title III Funding Portal registered with the SEC. This means that they’re subject to stringent rules regarding the investor education they provide, and the due diligence carried out on businesses.
Your money is safe when investing through Mainvest.
Currently, Mainvest only allows you to fund your investment with a bank account. Mainvest offers its services to both accredited and non-accredited investors, as long as they’re over the age of 18. You will need to make an initial investment of at least $100. Depending on the amount you’re planning to invest, Mainvest may need to confirm your identity (using either your social security number or a valid government-issued ID card).
If you’ve already made an initial investment but have decided that the risk factors outweigh any potential returns, there’s good news: you can change your mind! However, this cancellation opportunity is only valid for 48 hours after you’ve made your initial investment. It may be possible to cancel your investment after the company accepts your money, but this is not guaranteed. We recommend making sure you’re comfortable with the investment risk involved in any potential investments before committing.